Survey of 311 Executives by EY Hanyoung
Economic and Political Uncertainties Hinder Corporate Operations
A survey revealed that 9 out of 10 executives of domestic companies have a negative outlook on the Korean economy this year. Expectations for corporate performance growth also declined compared to last year.
Global accounting and consulting firm EY Hanyoung announced on the 17th that it obtained these results from a survey conducted last month targeting 311 executives of major domestic companies.
According to the survey results, 91% of all respondents viewed the domestic economy outlook for this year as ‘negative,’ with 24% responding ‘very negative.’ The negative response rate increased by 15 percentage points compared to last year (76%), marking the highest level in EY Hanyoung’s surveys conducted over the past five years. The ‘positive’ response rate was 9%, and the ‘very positive’ response rate was only 1%.
Regarding the possibility of performance growth, cautious optimism was shown. Responses expecting performance to grow compared to the previous year accounted for 41%, those expecting to maintain the previous year’s level were 35%, and those expecting a decline were 24%. However, the rate of respondents anticipating performance growth decreased by 8 percentage points from 49% last year to 41% this year. This figure has shown a continuous downward trend over the past five years. EY Hanyoung interpreted this as “an uncertain economic environment and external risks weakening corporate executives’ confidence.”
The biggest threats to corporate operations this year were identified as domestic and international economic and political uncertainties. ‘Economic slowdown and economic uncertainty’ had the highest response rate at 76%, followed by ‘U.S. Trump administration’s America First policy and protectionism (65%)’ and ‘domestic political risks (57%).’ Additionally, ‘rising raw material prices (54%),’ ‘high interest rates and prolonged inflation (53%),’ and ‘rising labor costs (52%)’ were pointed out as obstacles to securing corporate profitability this year.
Park Yong-geun, CEO of EY Hanyoung, emphasized, “In a period expected to see entrenched low growth like this year, companies must focus on core businesses and strive to improve performance,” adding, “Portfolio rebalancing centered on core businesses, data-driven decision-making, and proactive responses to innovative technologies and talent acquisition will be key factors determining corporate survival and growth.”
The survey involved companies from 15 industrial sectors, with 39% of respondents from companies with assets over 2 trillion won, 20% from companies with assets between 500 billion and 2 trillion won, and 41% from companies with assets under 500 billion won.
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